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Archive for Darlene Hart

Expatriated From US? Intend To Expatriate? New IRS Procedure

Darlene Hart

On September 6, 2019, the Internal Revenue Service (IRS) announced a new procedure which allows certain non-compliant US citizens who relinquished their US citizenship to become US tax compliant.

This procedure is geared towards ‘Accidental Americans’ who were unaware of their US tax obligations. As well, under this procedure, no US social security number is required.

The main eligibility points include:

1.       Prior compliance failures were non-willful.

2.       Past tax liability is not in excess of $25,000 for the six years of returns to be filed.

3.       Less than $2 million in net assets as of expatriation date.

4.       Expatriated after March 18, 2010.  Must expatriate prior to filing under this procedure.

5.       It is limited to individuals only.

6.       The taxpayer has no tax filing history as a US citizen or resident.

7.       Must include a copy of approved form DS-403, Certificate of Loss of Nationality with the filing.

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United States LLC- Is It A Smart Move For Foreign Nationals?

Darlene Hart LLCs

The filing requirements and practical application of a US LLC for foreign owners may force many foreign nationals to reconsider their options.  As of January 1, 2017, Limited Liability Companies (LLCs) formed in the United States, which are treated as disregarded entities and wholly-owned by foreign persons, are subject to new IRS reporting requirements.

Such foreign-owned US LLCs must file IRS Form 5472 if there are transactions between the direct OR indirect owners of the US LLC and the LLC itself. The IRS is asking for the tax resident status of the direct and indirect owners of US LLCs including information on the amount of cash or assets transferred to or from them. Form 5472 is not an income tax return, it is merely an information return which must be filed annually, but failure to file this form can result in a $25,000 penalty.

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US Supreme Court Wayfair Ruling Impacts Non-US Companies

Darlene Hart4

A US Supreme Court ruling last year is expected to impact every company that sells goods or services into the US within months, or even weeks and days. In many places, it has already begun.

The ruling, South Dakota v. Wayfair, is considered precedent-setting because of its finding that US states may charge tax on purchases made to individuals and businesses within their borders by out-of-state sellers, even if these sellers don’t have a physical presence in the state.

(Wayfair is an NYSE-listed e-commerce company based in Boston, Massachusetts. Two other defendants in the case, Overstock.com Inc. and Newegg, Inc., are also US-based internet retailers.)

Until the Supreme Court’s decision, states had the authority to impose a sales tax collection obligation only on businesses that were physically present within their borders.

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Most Important Set Of FATCA Regulations To Appear In Some Time If You Are A Trustee Of One Or More Documented Trusts

Darlene Hart, CEO US Tax And Financial Services

The US Internal Revenue Service and US Treasury have published what we regard as one of the most important sets of regulations to appear in some time – at least for anyone who happens to be a trustee of one or more trustee documented trusts; or who is  a compliance specialist with an institution such as a fund administrator, bank, brokerage firm  or in any other similar entity  with US persons among their clients, settlers and trust beneficiaries.

The “Regulations Relating to Verification and Certification Requirements for Certain Entities and Reporting by Foreign Financial Institutions (FFI’s),” (issued as TD 9852), focus on the way key information is provided to the US tax authorities under the Foreign Account Tax Compliance Act (FATCA) regime.

These regulations were effective as of March 25, 2019. There is obviously much to digest in this document, however, a few key points are essential to take on board for those in the business of looking after trusts with US connections, or similar cross-border arrangements involving American citizens, clients or beneficiaries.

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